Megatrends

The most influential Megatrends set to shape the world through 2030, identified by Euromonitor International, help businesses better anticipate market developments and lead change for their industries.

Confectionery in Brazil

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Executive Summary

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CHOCOLATE CONFECTIONERY IN BRAZIL

Trends

Although the country is beginning to emerge from two years of recession in 2017, growth is still anaemic, which is weakening consumer demand for many products, including non-essentials, such as chocolate confectionery. Inflation of 5% also impacted production costs, such as the cost of raw materials, packaging and logistics, all of which proved challenging for the category.

Competitive Landscape

Kraft Foods Brasil (owned by Mondelez International) remained the outright leader in chocolate confectionery during 2017, holding a value share of 30% – up slightly on the previous year. The company is well known among consumers and enjoys high awareness of many of its brands, such as Lacta, Sonho de Valsa and Ouro Branco. Moreover, in mid-2015, the company introduced Lacta 5Star, a countline aimed at the youth segment. This was promoted with a campaign featuring the slogan, “Mordeu, Bateu” (Bite, Hit) aiming to mimic its consumption experience, which according to the company is perceived in the first bite.

Prospects

During the forecast period, the category, whilst still declining, is expected to benefit from a marginal improvement in the economy and subsequent knock-on effect on consumer spending. This in turn will stimulate industry players into engaging in innovation. Major brand manufacturers are expected to focus an important part of their investment on research and development, as well as on improving their manufacturing processes to raise competitiveness in the context of the increasing cost of raw materials and shrinking margins. Differentiation is expected to be a key feature amidst new developments, with more convenient formats, innovative ingredients and fewer artificial ingredients and flavours to respond to the rising health awareness amongst consumers.

GUM IN BRAZIL

Trends

Gum saw a continued volume decline of 2% in 2017. The health trend continued apace as consumers became more health conscious, which boosted demand for sugar-free and chemical-free products. This stimulated companies into rebranding, relaunching and rethinking their marketing strategies to focus on brands to suit this demand. The category also continued to suffer from fierce competition from other snacks options at the end of the review period, particularly those with a strong health positioning.

Competitive Landscape

Kraft Foods (owned by Mondelez International) led the category with an 80% value share in 2017. Trident, Bubbaloo and Chiclets are the leading brands in sugar-free gum, bubble gum and sugarised chewing gum, respectively. The company’s overall performance stems from its concentration on brand management, including promotional campaigns implemented via social media and TV.

Prospects

Gum is forecast to see a modest CAGR of 1% in value sales at constant 2017 prices over the forecast period to reach BRL4.8 billion in 2022. Sugar-free gum is expected to continue to lead growth despite the economic slowdown, underpinned by growing health awareness among Brazilian consumers. As sugar-free gum’s oral hygiene benefits are well recognised by a growing proportion of the population, and many new product developments are emerging that offer a better deal in terms of larger packaging formats, Brazilians will continue to opt for sugar-free variants rather than sugarised, especially adult consumers. This will fit with their increasingly on-the-go lifestyles and consumption of food and beverages outside the home, facilitating increased purchases of higher value products.

SUGAR CONFECTIONERY IN BRAZIL

Trends

The increasing healthy eating trend amongst consumers in 2017 encouraged manufacturers of sugar confectionery to come up with healthier varieties of their products. Most players are working to adapt their portfolios to suit the demand for more natural products, through the reduction in the use of colourants, preservatives or other artificial ingredients. Attempts by manufacturers to adapt to health-conscious consumers also resulted in the elaboration of sugar-free and allergen-free varieties, the incorporation of functional ingredients to target older consumers and the improvement in the nutritional profile of sugar confectionery products.

Competitive Landscape

Arcor do Brasil, which led sugar confectionery in 2016, maintained its position in 2017 holding a 13% value share. However, its share declined slightly with its Kid’s brand seeing a half a percentage drop in its share of value sales in 2017 over the previous year. This downward movement was despite its efforts to extend the range via the introduction of a new mint and cherry option during 2016. The company dominates toffees, caramels and nougat, holding a 54% value share at the end of the review period. It also has a strong presence in lollipops (with 16%) and was second in pastilles, gums, jellies and chews on 13%. The company is also currently engaged in a packaging revamp for its 7 Belo brand, which involves the introduction of a tablet format, which the company is promoting via sampling campaigns.

Prospects

During the forecast period, innovation will be the driving force in sugar confectionery in the country. Manufacturers, such as Arcor, Kraft Foods, Perfetti Van Melle and Ferrero, are expected to continue to invest in new product developments and marketing campaigns in an effort to maintain consumer interest in their products. Moreover, product differentiation will take the form of new flavours, textures, formats and packaging, the incorporation of functional ingredients, as well as higher interaction with new technologies.

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